JOSH CHEMICALS LIMITED
Joshua Mawere, the Production Manager of Josh Chemicals, in Lusaka, Zambia, is preparing his quarterly report, which is to include productivity analysis for his department. One of the inputs is production data by Stanislus Munene, his operations analyst. The report which he eave him this morning showed the following:
|
2012
|
2013
|
|
Production (units)
|
4,500 |
6,000
|
| Raw materials used (barrels of petroleum byproducts) |
700
|
900 |
|
Labour hours
|
22,000
|
28,000
|
|
Capital Cost applied to the department ($)
|
375,000
|
620,000
|
Joshua knew that his labour cost per hour had increased from an average of $13 per hour to an average of $14 per hour, primarily due to a move by management to become more competitive with a new company that had just opened a plant in the area. He also knew that his average cost per barrel of raw material had increased from $320 to $360. He was concerned about the accounting procedures that increased his capital cost from $375,000 to $620,000, but earlier discussions with his boss suggested that there was nothing that could be done about that allocation.
Joshua wondered if his productivity had increased at all. He called Stanislus into the office and conveyed the above information to him and asked him to prepare this part of the report.
QUESTIONS
1. Prepare the productivity part of the report for Mr. Mimere. He probably expects some analysis of productivity inputs for all factors. as well as a multi-factor analysis for both years with change in productivity (up or down) and the amount noted.
2. Management's expectation for departments such as Mr. Mawere's is an annual productivity increase of 5%. Did he reach this go? Briefly explain your answer.